Licensing Requirements

The CMDA is responsible for licensing market intermediaries such as securities exchanges, central depositories, brokers, dealers, investment advisers, unit trusts and representatives. The requirements that must be satisfied to be licensed are outlined in the Capital markets Development Authority Act 1996 ("the Act") and the Capital Markets Development CMDA (Securities Exchanges and Licensing) Regulations, 1997 ("the Regulations"). Licences are granted for one year and have to be renewed thereafter.

Securities Exchanges
Brokers
Dealers
Investment Advisers
Unit Trusts or Property Trusts or Managed Investment Schemes

Securities Exchanges
Under the Act, the CMDA may grant approvals to companies to operate a securities exchange. In order to be granted an approval, the applicant:

- Must have appropriate memorandum and articles of association which prohibits the distribution of profits without CMDA approval and restricts membership to brokers and dealers and other institutions engaged in the securities business

- Must be engaged solely in the business of operating a securities exchange
- Must have a governing body consisting of brokers, dealers and persons providing fair representation of listed companies, investors and the general public
- Must have suitably qualified staff and an administration of sufficient capacity
- Must have suitably located premises and mode of operation
- Must have a physical trading facility to which members of the public are granted free access
- Must have rules and guidelines for trading, membership and listing

The CMDA has the power to grant exemptions from meeting any of these requirements.

Application fee: F$5,000

Licensing of Brokers, Dealers and Investment Advisers

The Act enables entities which were engaged in the business of broking or dealing prior to the enactment of the Act, to continue to do so provided they lodged their licence applications with the CMDA before 31 May 1997. Entities meeting this requirement can then continue to trade until such time their application is approved, rejected or withdrawn.

The principal licences granted are brokers (persons who carry on the business of buying and selling of securities as an agent for investors in return for a commission), dealers (persons who carry on the business of buying, selling, dealing, trading, underwriting or retailing of securities as principal whether or not he carries on any other business), investment advisers (persons carry on the business of advising others concerning securities; issues or promulgates analyses or reports concerning securities; or pursuant to a contact or arrangement with a client, undertakes on behalf of the client, the management of a portfolio of securities for the purpose of investment) and representatives (those who represent a licensee under the Act)

The requirements for obtaining a broker’s, dealer’s, or investment adviser’s licence or a representative licence are as follows:

Broker and Dealer Companies

- Must be a member of an approved securities exchange
- Must be a company incorporated under the companies Act
- Must have a minimum paid up capital of F$30,000
- Must lodge a bank guarantee with the securities exchange
- Must have suitably qualified staff
- Must have suitably equipped premises
- Must have adequate facilities to comply with settlement arrangement of the securities exchange
- Must have suitable directors and shareholders
- Must not carry on any other business other than that for which he is licensed nor any activities which are not ancillary to that business

Application fee: F$1,500

Individual Brokers and Dealers

- Must be a member of an approved securities exchange
- Must have a minimum net worth of F$30,000
- Must lodge a bank guarantee with the securities exchange
- Must have appropriate qualifications and experience
- Must have suitably equipped premises
- Must have adequate facilities to comply with settlement arrangement of the securities exchange
- Must not carry on any other business other than that for which he is licensed nor any activities which are not ancillary to that business

Application fee: F$1,500

Investment Adviser Companies

- Must have a minimum paid up capital of F$30,000
- Must have suitably qualified staff
- Must have suitably equipped premises
- Must have suitable directors and shareholders
- Application fee: F$1,000

Individual Investment Advisers

- Must have a minimum net worth of F$30,000
- Must have suitably equipped premises
- Must have appropriate qualifications and experience

Application fee: F$250

Representatives of Brokers/Dealers/Investment Advisers

Only natural persons can be licensed as representatives. Applicants:

- Must have a diploma or certificate or higher qualification in related subject from a tertiary institution or completed study program approved by the CMDA; or
- Must have been dealing or giving securities advice for a continuous period of 2 years prior to 1997

Application fee: F$75

Unit Trust Licence

To be granted a unit trust licence, the applicant must satisfy the requirements of the Unit Trusts Act, 1978. For additional information please contact the CMDA.

Application fee: F$1500

Representatives of Unit Trusts

See CMDA Notice No. 08/2000

Application fee: F$75